Youtube version of the clip available here
Regulation failure: Independent brokers unable to be ‘independent’
We were thinking of changing the way that brokers operate, by saying to our clients ‘our service comes at a price, we’ll advise you on any lender in the market and be totally independent, if we place your loan with one that pays commission you can set that against your fee, and if not then pay the fee’, doing so in the belief that totally transparent and independent advice is a good thing, and something that everybody wants, the broker, the consumer and the Regulator.
Sadly this is not the case, instead the Regulator (soon due another name change to ‘Central Bank Financial Services Authority of Ireland’) is relying on the letter of the law in the Consumer Credit Act of 1995 to ensure that brokers can’t give best advice. This is an example of total regulatory failure.
The actual portion of the code is S. 116.1.b which states ‘A person shall not engage in the business of being a mortgage intermediary unless— ( a ) he is the holder of an authorisation (“a …
Can a bank take back my tracker mortgage?
There has been some talk of this lately, and it is an issue that we have raised concerns on in the past – to get the good news out early – there is only a very small chance that banks might ever actually do this, but just in case we already pointed this out in 2009 and early 2010.
We’ll assume though that it is going to happen (for the sake of this post), so how will they do it?
The recent points have been regarding the small print in some of the tracker contracts, one example below is taken from a KBC tracker contract, but suffice to say similar or other ‘same end result’ conditions exist in other contracts (click on the image to see a larger version).
In this example KBC have had every right to remove trackers from their clients since …
Are banks lending?
A highly debated element of the recapitalisations to date and the NAMA debate have to do with credit flow, that if banks are given money that they will start to lend it out, the problem being that we currently have a rapid credit contraction.
The new Financial Regulator Matthew Elderfield made his first public appearance since arriving nearly three months ago, and he said “A robust recapitalisation exercise will ensure that Ireland’s banks start this process in a stronger position and with a better funding outlook”. He is alluding to the thing that many people are forgetting, that when a bank has as high loan to deposit ratio they naturally hoard credit during times of widespread credit deterioration in order to ensure they have sufficient capital to face the impairments.
NAMA won’t ‘force lending out’, this is the aspect of fiscal policy not being able to ‘push on a string’, fiscal and monetary policy can pull a string and reign credit …
Best Mortgage Rates February 2010
There is increased coverage of mortgages in the press of late in particular in the area of fixing or staying on a variable, below are the best rates available on the market by class of product.
Best Variable Rate with an LTV Restriction: 2.25% Best Variable Rate with no LTV Restriction: 2.55% Best 1yr Fixed Rate: 2.35% Best 2yr Fixed Rate: 2.65% Best 3yr Fixed Rate: 3.15% Best 5yr Fixed Rate: 3.7% Best 10yr Fixed Rate: 4.5%
Who has the best mortgage rates?
The ‘best rate’ is a misnomer because interpretation of what is the ‘best’ is a subjective question, for a very conservative person a 10 year fixed rate is ‘the best’ and from that point the ‘best’ will likely be whatever is the cheapest ten year fixed rate, having said that, after careful consideration the best 10 year fixed rate mortgage might be one that allows you to pay off a lump sum during the fixed period without any penalty thereby ensuring that you can eat into your capital quicker, is a feature like that worth extra money each month if it isn’t the cheapest? To some people it may be, to others it isn’t.
If you are considering a property purchase and are not a cash buyer then you will need financing, and this comes at a ‘price’, the interpretation of that price is generally the rate, so which rate is better (we’ll assume you want a 1 year fixed rate), 2.5% or 2.6%? Naturally you’d be inclined to say it is …
Understanding why mortgage rates MUST rise.
We have been saying for some time that interest rates on mortgages must rise, you can look at supply and demand, or you can look at the types of products that have ceased to exist such as tracker mortgages (removing fixed margin loan products) and then there is the proliferation of variable LTV products which set the stage for the ability to manipulate margin on more loans. The question is ‘what all of this means’, and the purpose of this post is to explain how deposits, business lending and mortgages are all interconnected parts of the banking system and how margins are set based upon them.
Last week PTsb finally came out and said that they were considering an …
Current account interest rates are set to drop
Banks have a pool of money called ‘zero rated funds’, this is the money that they hold for which they are paying no interest. Lots of current accounts fall under this category, and banks can figure out with time, the block that is there on a regular basis when you remove the marginal volatility in the funds held at any time.
Imagine you own a money shop and you buy in money and sell it too, in the till you know that no matter what happens you always seem to have at least €60 in the till, that would be the equivalent of your zero rated funds (hope that makes sense!).
When banks lend they take these zero rated funds and mix them with money bought on the market to come up with ‘blended rates’. So while some money is costing 0% other money might cost 1.269% (that’s today’s 3 month Euribor ), you then get an average of these and depending on what the ‘blend’ or ‘mix’ is your …
To fix or not to fix, even if it ain’t broken
Paul O’Connor from MyHat.ie asked me to do a post about fixed rates, like us, they get lots of questions on mortgages, property etc.
Fixed rates at the moment (there are new ones due for publishing soon on the back of the most recent rate cut) are (listing only the non-LTV restricted ones) as follows:
2yr fixed: 2.8% 3yr fixed: 3.1% 5yr fixed: 3.6% 10yr fixed: 4.25%
For those on variable rates the general rate suite is around the 3.1% mark, with several lenders telling us outright that they won’t be passing on rate cuts then moving to a fixed rate over up to the 5 year mark is of little consequence, in fact, it would likely be a smart thing to do because rate changes on the down are not going to be passed on (see the article on rate compression we did here before), but on …
To fix or not to fix, even if it ain't broken
Paul O’Connor from MyHat.ie asked me to do a post about fixed rates, like us, they get lots of questions on mortgages, property etc.
Fixed rates at the moment (there are new ones due for publishing soon on the back of the most recent rate cut) are (listing only the non-LTV restricted ones) as follows:
2yr fixed: 2.8% 3yr fixed: 3.1% 5yr fixed: 3.6% 10yr fixed: 4.25%
For those on variable rates the general rate suite is around the 3.1% mark, with several lenders telling us outright that they won’t be passing on rate cuts then moving to a fixed rate over up to the 5 year mark is of little consequence, in fact, it would likely be a smart thing to do because rate changes on the down are not going to be passed on (see the article on rate compression we did here before), but on …